Security Systems News - Mark Sandlerhttp://securitysystemsnews.com/taxonomy/term/4286
enHenry Edmonds presents on PERS valuationshttp://securitysystemsnews.com/blog/henry-edmonds-presents-pers-valuations
<div class="field field-name-field-blogger field-type-taxonomy-term-reference field-label-hidden clearfix">
<div class="field-items">
<div class="field-item even" property="schema:author dc:creator">Leif Kothe</div>
</div>
</div>
<div class="field field-name-field-pubdate field-type-datestamp field-label-hidden clearfix">
<div class="field-items">
<div class="field-item even" property="schema:datePublished dc:created"><span class="date-display-single" property="schema:datePublished dc:created" datatype="xsd:dateTime" content="2013-10-09T00:00:00-04:00">10/09/2013</span></div>
</div>
</div>
<div class="field field-name-body field-type-text-with-summary field-label-hidden clearfix">
<div class="field-items">
<div class="field-item even" property="schema:articleBody content:encoded"> <p>As I encounter new theories and projections about PERS valuations, I continue to find a refreshing lack of consensus among the experts. That’s not to say there aren’t areas of agreement. There are. Those watching the market often cite similar determinants of valuation, such as attrition rates, cash flow and the costs of creating new accounts. But experts seldom invest the same metrics with equal importance. </p>
<p>For example, Barry Epstein, president of Dallas-based Vertex Capital, believes reducing attrition rates to be a critical component of increasing <a href="http://www.securitysystemsnews.com/article/pers-company-valuations-predicted-rise" target="_blank">PERS valuations</a>. Conversely, Mark Sandler, a principal with SPP Advisors, downplayed the importance of churn, saying instead that a company’s value hinges more on how efficiently they can redeploy their units.</p>
<p>Today I came across a presentation on PERS valuations delivered by Henry Edmonds, president of The Edmonds Group, at the Medical Alert Monitoring Association conference held last week in Orlando. Edmonds’ insights reflect another nuanced interpretation of the market. In the presentation, he boiled PERS valuations down to four key metrics: cash flow; churn (attrition rate); growth rate/new account volume; and creation cost.</p>
<p>Just as vital for maximizing value is the ability of dealers to compile solid data on these metrics, Edmonds noted in one of the slides.</p>
<p>Edmonds developed some pretty in-depth calculations that he believes dealers should be cognizant of. For instance, churn rate metrics should account for total lost RMR on a trailing 12-month or trailing six-month basis. That figure should then be divided by average outstanding RMR. With respect to the cash flow, Edmonds advises dealers to focus on adjusted EBITDA and steady state free cash flow.</p>
<p>Edmonds’ presentation also offered a trove of information about buyers. He noted that buyers will create finance models for target companies, develop key assumptions based on a target company’s past performance and determine a capital structure based on current market conditions.</p>
<p>Edmonds also provided the following aphorism: “Buyers never pay more than they think they have to.”</p>
<p>In the coming weeks I plan to speak with Henry Edmonds himself to get a more in-depth take on PERS valuations and the state of the market in general. Stay tuned.</p> </div>
</div>
</div>
<span property="dc:title" content="Henry Edmonds presents on PERS valuations" class="rdf-meta element-hidden"></span>Wed, 09 Oct 2013 16:25:35 +0000Leif Kothe16864 at http://securitysystemsnews.comhttp://securitysystemsnews.com/blog/henry-edmonds-presents-pers-valuations#commentsPERS company valuations predicted to rise http://securitysystemsnews.com/article/pers-company-valuations-predicted-rise
<div class="field field-name-field-subtitle field-type-text field-label-hidden clearfix">
<div class="field-items">
<div class="field-item even">Epstein: Look for more PE activity in PERS market</div>
</div>
</div>
<div class="field field-name-field-pubdate field-type-datestamp field-label-hidden clearfix">
<div class="field-items">
<div class="field-item even" property="schema:datePublished dc:date"><span class="date-display-single" property="schema:datePublished dc:date" datatype="xsd:dateTime" content="2013-09-25T00:00:00-04:00">09/25/2013</span></div>
</div>
</div>
<div class="field field-name-field-blogger field-type-taxonomy-term-reference field-label-hidden clearfix">
<div class="field-items">
<div class="field-item even" rel="schema:author dc:creator">Leif Kothe</div>
</div>
</div>
<div class="field field-name-body field-type-text-with-summary field-label-hidden clearfix">
<div class="field-items">
<div class="field-item even" property="schema:articleBody content:encoded"> <p>PARK CITY, Utah—Fresh off moderating a PERS Summit panel, Barry Epstein, president of Dallas-based Vertex Capital, expects the PERS acquisition market to heat up as valuations climb. </p>
<p>“The market will continue to grow as new entrants come into the market seeking recurring revenue companies,” Epstein told Security Systems News. “Valuations will move upward as churn is decreased and the average life of the account lengthens.”</p>
<p>Epstein moderated a panel discussion about the PERS acquisition market at the annual AvantGuard Monitoring PERS Summit, which took place Sept 10-12 in Park City, Utah. The panel included: John Brady, president of TRG, an alarm industry consulting firm; Les Gold, an attorney with Mitchell, Silberberg &amp; Knupp; and Will Schmidt, managing director of security lending group at CapitalSource. </p>
<p>Most PERS companies are nowhere near maximizing their value from an RMR standpoint, which limits their acquisition value, according to Epstein. While metrics vary, it is generally accepted that PERS accounts have higher rates of attrition than alarm accounts. The annual attrition rate for alarm accounts hovers between eight and 12 percent, while that of PERS accounts is said to be 24 and 36 percent, Epstein said. </p>
<p>Some of these rates can be chalked up to the relative youth of the market as compared to the alarm industry, together with still-developing market research. High rates may also be attributable to a senior clientele that stops using the service because they die, rather than because they’re dissatisfied with it.</p>
<p>However, Epstein believes overall attrition rates will improve, and the industry could see a surge in value aided by private investment capital. Epstein pointed out that private equity firms are typically attracted to the RMR model. “The combination of better metrics and new, large buyers will make the acquisition market robust over time,” Epstein told SSN. </p>
<p>Mark Sandler, a principal with SPP Advisors, an investment banking firm in the PERS and security industry, believes high attrition rates can be a red flag to buyers, but only if they’re truly exorbitant. After all, he noted, attrition in the PERS space is inevitable because the products are tailored for older customers. </p>
<p>A metric of greater importance, he said, is how efficiently a company can create consistent RMR despite high attrition. “You’re buying the unit’s ability to generate recurring revenue for you,” he said. “You’re buying a machine that enables you to efficiently redeploy those assets.”</p>
<p>With this in mind, another important related metric, Sandler noted, is the percentage of devices a given company retrieves from customers, since a PERS company can generate value by redeploying a used PERS device. A good PERS company will get 95 percent or more of its units back, and will be able to clean the units and redeploy them in a matter of days, Sandler said. </p>
<p>The PERS business model relies on hyper-efficiency in the face of attrition to generate potentially robust revenues—that much is known. What’s less certain is what type of company stands to prosper in this climate.</p>
<p>One of the more surprising observations from the show, according to Epstein, was the composition of the attendees, a group comprised of representatives from 75 dealers and 20 manufacturers. “One might have thought that alarm companies would be there looking to augment their business with a new market for RMR,” Epstein said. “It was surprising to see that over 80 percent of the dealers were strictly PERS, with little or no alarm accounts.” </p>
<p>Whether the PERS industry is becoming what Epstein termed “an industry unto itself” remains to be seen. But he predicted that alarm companies will find it challenging to enter the PERS space. He said it would be like the challenges traditional dealers encountered going after mass-market accounts. “Unless you’re large enough, it’s hard to put that in a division that focuses exclusively on the PERS market,” Epstein said. Last month, Moon Security, a full-service security company based in Pasco, Wash., launched<a href="http://www.securitysystemsnews.com/article/moon-security-enhance-pers-division" target="_blank"> Moon Medical Alert</a>, a PERS-only division.</p>
<p>As far as newcomers to the PERS industry are concerned, it is difficult to predict when the market will see its expected surge in private investment value. But favorable demographics, together with the continued development of mobile PERS units, could signal that it’s not far off. “You don’t know when buyers will come in and you don’t know when markets will explode,” Epstein said. “It’s hard to predict, but you can see the trend is upward toward acquisitions, and they’ll increase substantially as more dealers reach a size attractive to larger, outside buyers.”</p>
<p> </p> </div>
</div>
</div>
<span property="dc:title" content="PERS company valuations predicted to rise " class="rdf-meta element-hidden"></span>Wed, 25 Sep 2013 15:58:38 +0000Leah Hoenen16817 at http://securitysystemsnews.comhttp://securitysystemsnews.com/article/pers-company-valuations-predicted-rise#commentsSecurity companies, others eye growth of PERS markethttp://securitysystemsnews.com/article/security-companies-others-eye-growth-pers-market
<div class="field field-name-field-subtitle field-type-text field-label-hidden clearfix">
<div class="field-items">
<div class="field-item even">Industry insiders disagree on promise of mobile PERS and whether security companies have the edge in this market</div>
</div>
</div>
<div class="field field-name-field-pubdate field-type-datestamp field-label-hidden clearfix">
<div class="field-items">
<div class="field-item even" property="schema:datePublished dc:date"><span class="date-display-single" property="schema:datePublished dc:date" datatype="xsd:dateTime" content="2013-02-20T00:00:00-05:00">02/20/2013</span></div>
</div>
</div>
<div class="field field-name-field-blogger field-type-taxonomy-term-reference field-label-hidden clearfix">
<div class="field-items">
<div class="field-item even" rel="schema:author dc:creator">Leif Kothe</div>
</div>
</div>
<div class="field field-name-body field-type-text-with-summary field-label-hidden clearfix">
<div class="field-items">
<div class="field-item even" property="schema:articleBody content:encoded"> <p>YARMOUTH, Maine—With the market for personal emergency response systems projected to grow substantially in the coming years, it’s easy to see why financial analysts and security companies alike are taking an interest in it.</p>
<p>Fueled by factors such as an aging population, the potential cost savings for seniors who stay in their own home, and the relative resilience of the market, growth is in the forecast for PERS. However, the projections tend to belie two important points: First, that it’s not easy for security companies to enter the PERS market, and second, the market is still defining itself from a technical standpoint. </p>
<p>A potential challenge to entering the market, according to Josh Garner, CEO of AvantGuard Monitoring Centers, based in Ogden, Utah, is that the barriers are not the same as those for traditional security companies.</p>
<p>“The biggest barrier to entry in the security industry might be technical skills, or how expensive and complex it is to start up a central station,” Garner said. “The PERS industry is not complex and not technically difficult. The biggest barrier to entry in the PERS industry is finding a market channel.”</p>
<p>Garner said a lot of PERS startups or companies adding PERS devices to their security offerings underestimate how difficult it is to identify and establish a market. The upshot is that these companies often end up spending a lot of money trying to find a marketing channel, but not getting anywhere because, Garner said, “they don’t find the right vein.”</p>
<p>This is often a function of misperceptions about whom they’re trying to engage.</p>
<p>“A lot [of companies] think you’re going to be selling the devices to older people,” Garner said. “But it’s more their son or daughter you’re selling to, and sometimes it’s hard to find people who qualify, people who have a parent who lives alone.”</p>
<p>Just as the barriers to entry are a bit foreign from a security industry standpoint, so too is the competition. Garner said that, ironically, the people he’s seeing succeed in the PERS industry rarely come from the security side.</p>
<p>Security companies looking to enter the market can expect not only to compete with each other, but also entrepreneurs with backgrounds in other fields, like home health care. In some ways, a background in home health care can be a competitive advantage.</p>
<p>The reason? Access to customer data.</p>
<p>“They already have a customer list and database of potential users of a PERS service,” Garner said. “This is the reason those companies are able to overcome that marketing-channel barrier to entry.”</p>
<p>Though less a barrier to entry than a caveat, companies monitoring PERS devices need to have call operators who are aware of the fact that non-traditional security devices can yield non-traditional security scenarios. Confusion, dementia, orneriness, anxiety—PERS operators must be prepared to manage, and often comfort, patients in such states.</p>
<p>This is a major part of what makes PERS devices different from traditional security monitoring. Michael Bodnar, president of Security Partners, a wholesale monitoring company based in Lancaster, Pa., said it necessitates a different approach to training. </p>
<p>“It requires a radically different approach to the monitoring side of the business,” said Bodnar, whose company distributes and monitors PERS devices. “There’s specialized training we provide to our staff, and we have our own educational vehicles for partners and dealers, and we’ll touch on these items regularly.”</p>
<p>Bodnar added that, compared to traditional security monitoring, there is an essential human element that PERS operators must possess.</p>
<p>“At a very basic level, it comes down to a human factor at the core,” Bodnar said. “We have folks who live at home—seniors—who rely on us to be there for them, not only if they have a health-related issue, but if they’re feeling anxiety or loneliness or if they’re fearful for their security.”</p>
<p>This regard for both health concerns and security issues demonstrates the blending effect PERS devices have had on the industry, how they’ve merged some aspects of the industry with that of home health care. </p>
<p>While there are currently no additional monitoring credentials required by the industry to be a call operator for PERS devices, some companies tout their EMT-trained operators. It is a claim that may look good on paper, but which Garner says is not absolutely necessary to do the job effectively.</p>
<p>An attribute of PERS that makes it an attractive market for the security industry is not only the simplicity of the technology, but how easily the devices can be incorporated into an existing security or monitoring operation. But as simple as the technology is, there are limitations for some of the devices, particularly for the GPS-enabled units designed for use outside the home. </p>
<p>As Garner explained, it's a Catch-22. GPS-enabled PERS devices tend to be more accurate when they're "pinging" satellites, he said, but currently they're not doing this as much in order to preserve battery life. They require a bigger battery than the ones they typically have, but bigger batteries mean bigger devices, and bigger devices are less palatable to consumers. Smaller, longer-lasting batteries, Garner said, will "help solve some of the problems that have kept [mobile PERS units] from completely exploding.”</p>
<p>While efforts are under way to make mobile units smaller, there's a divide in the PERS community about whether sales of such units actually will grow substantially.</p>
<p>"My contention is that if you can in get the car and drive to the grocery store, you don't need a PERS unit," said Mark Sandler, a principal with SPP Advisors, an investment banking firm in the PERS and security industries.</p>
<p>Mobile units aside, Sandler expects favorable demographics to ensure that PERS devices for the home become a strong RMR boost for bigger alarm and security companies.</p>
<p>Still, there is nothing like a consensus here. Garner believes that, when it comes to PERS, security companies still have to prove their mettle.</p>
<p>“The jury’s still out, but I hope our security dealers will be successful,” he said. “There’s a couple who are very successful but some are struggling because of that barrier to entry with the marketing vein.”</p> </div>
</div>
</div>
<span property="dc:title" content="Security companies, others eye growth of PERS market" class="rdf-meta element-hidden"></span>Wed, 20 Feb 2013 18:50:16 +0000Leif Kothe16128 at http://securitysystemsnews.comhttp://securitysystemsnews.com/article/security-companies-others-eye-growth-pers-market#comments